Washington CFS 2025 Update: Book-and-Claim Restrictions, Third-Party Verification & Hard-to-Decarbonize Fuel Pathways

Key Takeaways

• Avoided methane credits for dairy and swine RNG projects receive a 20-year maximum crediting period through 2029, coupled with unprecedented environmental compliance guardrails—facilities must maintain full regulatory compliance or face credit suspensions.
• Book-and-claim accounting for RECs and RNG introduces regionality (Washington/Pacific Northwest) and additionality (post-2019 operations) requirements by 2030 for electricity and 2035 for standard RNG, while aviation and marine fuels retain out-of-region RNG use through 2046 to support market maturation.
• Third-party verification begins in 2028 for large credit generators (≥10,000 credits/year) and by 2032 for mid-sized entities (3,000–9,999 credits), with a 41% penalty on carbon intensity exceedances and a true-up mechanism to ensure credit integrity.
• Zero-emission vehicle infrastructure crediting periods expand—10 years for heavy-duty fast charging (with 50 kW minimum/10 MW cap per site) and 15 years for heavy-duty hydrogen refueling—while fossil hydrogen credits phase out in 2035, signaling robust support for emerging clean transportation technologies.
• The adopted rule introduces safeguards to mitigate the risks associated with negative environmental and public health externalities occurring from the incentives granted to new methane capture projects that commence construction on or before December 31, 2029.

Washington State Department of Ecology adopted significant amendments to the Clean Fuel Standard (CFS) program on October 20, 2025, with the updated regulations taking effect November 20, 2025. This rulemaking represents the most comprehensive update to the program since its implementation in January 2023, introducing critical changes that will reshape credit generation opportunities, strengthen environmental safeguards, and enhance program integrity through third-party verification requirements. cCarbon has been tracking this rulemaking update since 2024 and has updated the forecast model with House Bill 1409 updates in our WA CFS 20235 Outlook Analyst note. Join in for our webinar on 10th Dec 2025.

Program Background and Legislative Updates

The Washington Clean Fuel Standard, established by the legislature in 2021 under RCW 70.A.535, requires a gradual decrease in the carbon intensity of transportation fuels to combat climate change. The program operates alongside the Climate Commitment Act to address transportation emissions, which account for nearly 45% of Washington’s total greenhouse gas emissions.

In May 2025, Governor Bob Ferguson signed House Bill 1409, significantly strengthening the program’s targets. The updated law requires a 45% reduction in greenhouse gas emissions by 2038 compared to 2017 baseline levels, replacing the original 20% reduction target by 2034. The new requirements phase in gradually, with a 5% additional reduction for 2026, 4% for 2027, and 3-4% annually from 2028 through 2038. The Department of Ecology retains authority to increase reduction targets up to 55% by 2038 if certain conditions are met.

Advanced Clean Trucks & Heavy-Duty Low NOx Omnibus Amendments

In parallel with CFS updates, Ecology has also amended Chapter 173-423 WAC to align Washington’s Clean Vehicles Program with California’s Advanced Clean Trucks (ACT) and Heavy-Duty Low NOx Omnibus regulations. The ACT rule requires medium- and heavy-duty vehicle manufacturers to ramp up zero-emission vehicle sales through model year 2035 or procure compliance credits from over-achieving peers, offering market flexibility while driving incremental fleet electrification. The Low NOx Omnibus standard mandates that all new heavy-duty internal combustion engines sold in Washington from model year 2026 onward meet more stringent NOₓ and particulate limits.

Avoided Methane Crediting: Extended Timelines with Enhanced Safeguards

The most debated aspect of the rulemaking centered on avoided methane crediting (AMC) for renewable natural gas produced from dairy and swine manure. The final rule establishes a maximum 20-year crediting period for new dairy digester projects that break ground between January 1, 2023, and December 31, 2029. This represents an extension from the originally proposed 15-year maximum and aligns with California’s Low Carbon Fuel Standard amendments.

Projects breaking ground after 2030 will receive more limited crediting periods: through 2040 for RNG used directly as transportation fuel, and through 2045 for RNG used to produce electricity, hydrogen, alternative jet fuel, alternative marine fuel, or renewable diesel. For existing projects that became operational before the CFS program launched in 2023, the rule provides a graduated crediting period based on proximity to the program start date. For example, a facility that began operations in 2020 would receive a maximum of 17 years of crediting (20-year maximum minus 3 years prior to CFS implementation).

Environmental Guardrails

In response to significant public concern about potential negative impacts on rural communities and environmental justice considerations, the final rule introduces unprecedented environmental compliance requirements. Facilities must remain in compliance with all applicable federal, state, and local environmental regulations, including air quality emissions, water quality and discharges, solid and hazardous waste management, odor/nuisance management, concentrated animal feeding operations (CAFO) regulations, and nutrient management requirements.

If a regulatory authority with jurisdiction finds a facility in violation, the pathway holder becomes ineligible to generate avoided methane credits until the violation is remedied to Ecology’s satisfaction. While retroactive credits will not be issued for the noncompliance period, pathway holders may continue generating standard CFS credits with a revised carbon intensity score excluding avoided methane benefits.

The rule also requires dairies to demonstrate they historically used liquid or slurry manure management systems to prevent facilities from switching from dry to liquid manure management solely to qualify for avoided methane credits.

Book-and-Claim Accounting: Regionality and Additionality Requirements

The amendments significantly modify book-and-claim accounting rules for renewable electricity and renewable natural gas (RNG), aiming to incentivize regional renewable energy production and maximize local environmental benefits.

Renewable Electricity Requirements

For renewable electricity claimed through Renewable Energy Certificates (RECs), the final rule establishes both regionality and additionality requirements. Beginning January 1, 2030 (delayed from the originally proposed 2026 effective date), RECs must be generated from facilities located in Washington state or the Pacific Northwest region. The additionality requirement mandates that generation facilities became operational on or after January 1, 2019—aligning with Washington’s Clean Energy Transformation Act (CETA) adoption date.

The rule maintains a three-quarter vintage requirement for REC retirement, codifying existing guidance that RECs must be retired within three calendar quarters of generation.

Renewable Natural Gas Regionality

For RNG used through book-and-claim accounting, regionality requirements will phase in by 2035 (extended from the originally proposed 2030 date in response to industry feedback). However, alternative jet fuel and alternative marine fuel receive extended timelines through 2046 to use out-of-region RNG, recognizing these hard-to-decarbonize sectors’ unique challenges and the need to support market maturation.

Alternative Aviation Fuels: Supporting Hard-to-Decarbonize Sectors

The rulemaking implements requirements from Engrossed Substitute Senate Bill 5447 (Chapter 232, Laws of 2023) regarding alternative jet fuel production. The rule clarifies that the carbon intensity of conventional jet fuel under the WA-GREET 3.0 model is 90.12 gCO₂e/MJ, establishing the baseline for the 50% reduction threshold (45.06 gCO₂e/MJ) required for state tax credit eligibility.

Electrolysis Energy Standards

For alternative jet fuel and alternative marine fuel produced using electrolysis-based hydrogen, new requirements govern the carbon intensity of process energy. Producers may use either utility-specific carbon intensity (USCI) or utility renewable energy products (UREP) to demonstrate low-carbon electrolysis energy through December 31, 2037 (extended from the originally proposed 2033 cutoff).

To ensure electricity comes from new or recent non-emitting sources supporting grid decarbonization, rate schedules negotiated after December 31, 2025, must meet additional conditions demonstrating that the electricity contributes to Washington’s energy grid decarbonization efforts. This approach creates market demand for Renewable Thermal Certificates (RTCs) while supporting CETA goals.

Alternative Marine Fuel Limitations

Unlike sustainable aviation fuel, which benefits from specific legislative direction to promote production, alternative marine fuel credit generation is limited to fuel combusted within Washington waters. This constraint aims to balance the credit market and maintain healthy credit prices, preventing excess credit generation that could depress market values since conventional marine fuel is exempt from deficit generation under RCW 70A.535.040(1)(b).

Third-Party Verification: Enhancing Program Integrity

The adopted rule introduces comprehensive third-party verification requirements modeled after California and Oregon’s low-carbon fuels programs. Verification begins in 2028 (delayed from the originally proposed 2027 start date) covering reported data from 2026-2027, providing additional time for verifier training and reporting entity preparation.

Verification Thresholds and Phasing

The rule establishes tiered verification requirements based on annual credit generation:

Entities generating 10,000+ credits annually: Subject to annual verification beginning in 2028

Entities generating 3,000-9,999 credits annually: May defer verification for up to 4 years, with initial verification required by 2032

Entities generating fewer than 3,000 credits from electricity: Exempt from verification requirements

For electricity reporting entities, less-intensive verification (which does not require site visits) is available for 2 out of every 3 years for those generating 10,000+ credits annually. Non-metered residential EV charging credits and associated revenue expenditure reports are explicitly exempt from third-party verification.

Fuel Pathway Verification

All fuel pathways providing site-specific data for carbon intensity determination—both Tier 1 and Tier 2 pathways—are subject to third-party verification unless specifically exempted. Verification statements must be submitted by September 15 each year. Lookup table pathways are exempt because Ecology determines their carbon intensity scores directly, though the fuel transactions remain subject to verification.

The rule introduces a 41% penalty for operational carbon intensity exceeding certified carbon intensity (the “CI exceedance penalty”), beginning with the 2026 fuel transaction reporting year. This provision does not apply to provisional pathways.

Zero-Emission Vehicle Infrastructure: Expanded Capacity Credit Opportunities

Heavy-Duty Fast Charging Infrastructure (HD-FCI)

The final rule extends the crediting period for HD-FCI pathways from five years to ten years, responding to commenter concerns and aligning with California’s final rule language. This extended period accounts for the increased capital expenditure needs of heavy-duty charging sites compared to light- and medium-duty installations.

All fuel supply equipment registered under HD-FCI pathways must have a minimum nameplate power rating of 50 kilowatts. Additionally, the total nameplate power rating for all equipment eligible for HD-FCI capacity credits at a single site cannot exceed 10 megawatts. This threshold ensures credits are allocated across a range of sites and entities while allowing significant capacity credit generation to incentivize heavy-duty charger installation.

The rule expands credit generation opportunities to electric charging and hydrogen refueling sites shared by multiple heavy-duty vehicle fleets. For shared heavy-duty hydrogen refueling infrastructure (HD-HRI) sites, public point-of-sale terminal requirements were removed, recognizing that shared sites often utilize subscription fees or other payment methods.

Light- and Medium-Duty Fast Charging Infrastructure (LMD-FCI)

Sites approved before November 15, 2025, are grandfathered under the original capital expenditure and quarterly reporting requirements from the November 28, 2022 rule. Sites approved after the effective date must meet updated requirements established in the current rulemaking.

Hydrogen Fuel Provisions

The rule maintains existing provisions allowing hydrogen produced from methane pyrolysis as a renewable hydrogen feedstock when it meets program standards. The definition of renewable hydrogen includes hydrogen derived from catalytic cracking or steam methane reforming of biomethane.

Notably, fossil fuel-derived hydrogen will no longer be eligible for CFS credits beginning in 2035, ensuring state incentives support the lowest-carbon intensity hydrogen production. This requirement aligns with California Air Resources Board’s Low Carbon Fuel Standard updates.

Implementation Timeline and Stakeholder Response

The rule amendments became effective November 20, 2025, though various provisions have staggered implementation dates:

2026: CI exceedance penalty takes effect; HB 1409 emissions reduction targets begin

2028: Third-party verification begins for largest credit generators

2030: Book-and-claim regionality and additionality requirements for electricity take effect

2032: Verification requirements begin for mid-tier credit generators

2035: Book-and-claim regionality requirements for RNG take effect; fossil hydrogen becomes ineligible

2037: Extended timeline for alternative jet fuel and marine fuel electrolysis energy requirements ends

2046: Book-and-claim regionality requirements for alternative aviation and marine fuel feedstocks take effect

The rulemaking generated substantial public engagement, with over 150 individual comments and organizational submissions. Industry stakeholders, particularly from the dairy and renewable natural gas sectors, generally supported extended avoided methane crediting periods but requested even longer timelines. Environmental and environmental justice organizations advocated for stricter limitations or complete elimination of avoided methane credits, citing concerns about factory farm expansion and impacts on rural communities.

The final rule represents Ecology’s effort to balance greenhouse gas emission reductions, environmental justice considerations, market stability, and alignment with other West Coast clean fuels programs as required by RCW 70A.535.060.

The 2025 rulemaking cements Washington’s CFS as one of the most progressive and technically robust clean fuels programs in North America. It sets a high bar for regional supply integrity, environmental justice, program harmonization and data assurance. As targets ramp, market participants must align strategies not just for compliance, but for investment and innovation—taking account of phased regionality, project eligibility windows, and the state’s evolving clean fuels policy landscape.

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